Reforms reap results in deterring economic crime

ECONOMIC crime has long weighed on Malaysia’s economy. Between 2018 and 2023, losses from corruption alone were estimated at RM277bil or about RM1,609 per Malaysian.

The shadow economy is also significant. Estimated at up to 30.2% of GDP, it is driven by smuggling, tax evasion and unreported business activity.

On the digital front, from 2023 to 2025, losses due to phone scams, e-commerce fraud and fake investment schemes amounted to RM5.62bil.

But the past 18 to 24 months have seen a turning point in tackling economic crime with stronger laws, tighter coordination and more decisive enforcement.

Faster fund tracing, more mule-account takedowns, fewer successful phishing attacks and a higher volume of blocked fraud attempts are reshaping how Malaysia detects, disrupts and deters economic crime.

The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLA) 2001 was amended to expand its reach to cover proliferation financing and strengthen its powers across investigation, reporting, supervision and forfeiture.

Compliance expectations have also been raised, particularly for designated non-financial businesses and professions such as law firms, accountants and estate agents. Besides widening the enforcement net, these changes also enable earlier intervention, allowing the authorities to identify and freeze suspicious assets more swiftly.

Following amendments to the Companies Act 2016, beneficial ownership is now firmly embedded within Malaysia’s corporate framework. Section 60A, together with the Companies Commission of Malaysia’s Guidelines for the Reporting Framework for Beneficial Ownership of Companies (Revised 2025), defines a beneficial owner of a company as the natural person who ultimately or effectively owns or controls a company, whether formally or informally.

By cutting through shell structures and layered ownership, these reforms make it harder to conceal illicit proceeds and allow investigators to easily trace funds in corruption and fraud cases.

New sections (424A-424D) in the Penal Code (Amendment) Act 2024 introduce severe penalties for individuals holding or allowing access to their bank accounts for illegal transactions, often used for scams. It is now an offence to:

> Possess or control another person’s account or payment instrument without lawful authority;

> Allow another person possession or control of one’s own account; and

> Conduct unlawful transactions using one’s own or another person’s account.

These provisions directly address the operational backbone of scam networks, enabling the authorities to act not only against masterminds but also the facilitators of these schemes.

The government is also moving to hardwire transparency into public procurement through a dedicated procurement law – the Government Procurement Act 2025. Passed by Parliament in September last year, it standardises tender rules, makes open and competitive bidding the default, and extends coverage to many government-linked entities.

A national vendor registration framework requires suppliers to meet fit-and-proper criteria, declare conflicts of interest, and comply with codes of conduct. Non-compliant vendors would be suspended or excluded.

Mandatory e-Invoicing adds another layer of control. By requiring invoices and related documents to be validated electronically before issuance, the system reduces fraud risks and improves tax visibility.

The result is a more transparent and traceable transaction environment, limiting opportunities for manipulation at source.

Taken together, these reforms signal a shift towards earlier intervention, tighter oversight and more effective disruption of illicit activity.

But laws alone do not enforce themselves. Their effectiveness will depend on how well they are supported by institutional coordination, intelligence capabilities and cross-border cooperation, particularly in cases where funds move rapidly across jurisdictions. Ultimately, stronger laws matter, but faster action matters more.

LEONARD YEOH and SHARON TEO

Tay & Partners

Kuala Lumpur